Tougher regulation for Big six energy companies after customers pay £2bn too much
The energy companies known as the Big Six (you know who they are by now) have such influence and hold over the UK market that it is thought that consumers are likely to pay almost £2bn too much by the end of the decade.
The Institute for Public Policy Research (IPPR) have argued that tougher regulation is needed from Ofgem to improve competition and ensure pricing is fairer.
"We are calling on the big six and Ofgem to demonstrate whether efficiency savings are being achieved in the energy market and whether consumers are benefiting from lower bills as a result, as we would expect if competition was working," said Will Straw, IPPR's associate director.
The report, called The True Cost of Energy, shows annual efficiency savings of 2.5% in the UK could deliver £1.9bn in savings for consumers in 2020. Adam Scorer, director of policy and external affairs at Consumer Focus, said the report raises a number of important questions: "There are many improvements which can be made to this market, but a good start would be to ensure that smaller suppliers can compete with the big six on a level playing field. Customers also need to know that suppliers are really competing for their business by passing on efficiencies and wholesale cuts, as well as ensuring customer service is first rate."
This of course, comes on the back of Ofgem's calls for the Big Six to be more transparent with their pricing and reduce the number of tariffs in a bid to make things more simple for people shopping around for new deals. On the flipside, the Big Six have argued that their profit margins are slim thanks to being victims of rising wholesale prices, as well as being 'blamed' for the government's failure to create a convincing green policy.
The report also suggests that Big Six are overcharging customers to subsidise cheap offers. "As a result some families are paying as much as £330 more than their neighbours to use the same amount of energy from the same company. Over 5 million people could be overcharged because tariffs are not cost reflective as required by Ofgem."
Either way, it looks like Ofgem need to reform the industry or we're all going to have to burn pensioners to get through future winters.